Ethereum wants to hide your trades from bots before they can attack

Ethereum developers are weighing a new defense against predatory trading bots that exploit pending transactions before they reach the blockchain.

The problem stems from Ethereum’s public mempool, a transparent waiting room where transactions can be inspected before execution. That visibility lets automated traders spot profitable orders and place their own transactions around them, extracting value from users before a trade settles.

The practice has become most closely associated with sandwich attacks. A bot spots a pending swap, buys the same asset first to move the price against the user, then sells immediately after the victim’s trade executes at the worse price.

While estimates suggest losses from such attacks have declined from earlier peaks, the problem has not disappeared. In April, Ethereum co-founder Vitalik Buterin was himself targeted when the notorious Jaredfromsubway.eth bot front-ran and back-ran a small swap from one of his addresses.

Developers are now exploring whether encryption can remove the informational advantage that makes those attacks possible.

Protocol researchers are scheduled to discuss the issue during an Aug. 19 “Encrypt the Mempool” call, where they will examine proposals designed to conceal transaction contents until their position in a block has already been committed.